Bangkok An entire country is standing still: the South Asian island nation of Sri Lanka has run out of fuel in the midst of the worst economic crisis in its history. The last reserves may only be used for absolutely necessary services such as the transport of food and sick people.
For the time being, private individuals have no chance of filling up the tank. The country will have to wait several weeks for the next delivery of petrol – and it is completely unclear whether the government will find enough money to pay for the fuel.
In the desperate situation, the country’s leadership is now calling on Russia for help. President Gotabaya Rajapaksa addressed his Russian counterpart Vladimir Putin directly this week with a request for fuel support.
Sri Lanka is not the only country in Asia to tie itself more closely to Russia in the face of an imminent economic collapse: Laos, which is facing bankruptcy, is also hoping for rescue oil supplies from Moscow. For the Kremlin, which is ostracized in the West, the emergencies offer the opportunity to present themselves as benefactors in Asia.
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Putin does not have to fear political resistance from his economically struggling interlocutors because of his attack on Ukraine: they appear to him as petitioners. Sri Lanka’s head of state Rajapaksa said on Twitter that he had “humbly asked” the Russian president in a telephone call to send passenger planes with Russian tourists back to his country. He also requested a credit line from Russia to be able to import fuel.
War in Ukraine accelerated the crash
The calls for help are the result of an economic crisis that was massively exacerbated by the Ukraine war: The country in the Indian Ocean with a population of 22 million is hopelessly over-indebted and has been considered bankrupt since a missed payment in May.
The problems already existed before the Russian war of aggression. However, the sharp rise in energy and food prices accelerated the crash: the inflation rate rose to a new record high of 55 percent in June. Groceries had even become more expensive by 80 percent.
Friend in financial need? The President of Sri Lanka asked Putin for help in a telephone call.
(Photo: AP)
Important goods have become rare: If you want to buy gas for cooking, you have to queue for days. Observers are already talking about a humanitarian crisis. According to a survey by the UN children’s fund Unicef, 70 percent of households have to limit their food consumption. Talks about an aid package with the International Monetary Fund ended at the end of June without a result.
The situation in Laos, one of the poorest countries in Southeast Asia, is similarly precarious. The country, which lies between Thailand and China, is also on the verge of bankruptcy, according to rating agencies.
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The national currency, the kip, has depreciated by more than a third against the dollar since the beginning of the year. The inflation rate is currently at almost 24 percent – the highest level since the turn of the millennium.
Fuel imports rose particularly sharply. As a result, there have been significant bottlenecks in recent weeks. Motorists had to wait hours at the gas stations. A fuel delivery in June brought some temporary relief – but the amount should only last for a few more weeks.
The communist government in the capital Vientiane is hoping for sustained support from Russia. Prime Minister Phankham Viphavanh instructed his cabinet to explore ways to import cheap oil from Russia. Pakistan, which is also economically ailing, is reacting in a similar way. The government in Islamabad announced last week that it was open to cheap oil from Russia.
Russia’s charm offensive is successful
India and China are likely to be role models: while the West is trying to break away from Russian energy imports, Asia’s largest emerging countries have significantly expanded their business with the Kremlin and are benefiting from considerable price reductions. Nevertheless, the agreements are worthwhile for Russia: In the three months after the Russian invasion of Ukraine, India and China spent 24 billion dollars on Russian energy, according to customs information – 13 billion dollars more than in the same period last year.
Russia’s government had already announced in April that it wanted to accommodate “friendly nations” with oil deliveries. The government in Moscow also presented itself as helpful in other ways: According to government information, Sri Lanka was offered additional wheat deliveries by Russia in the fight against food shortages.
In search of cheap oil, India has been approaching Russia for some time. The war didn’t change that.
(Photo: imago images/Hindustan Times)
The Russian charm offensive is successful: In Asia, the country is nowhere near as isolated as the West would like. Vietnam welcomed Russian Foreign Minister Sergey Lavrov with open arms this week. “Russia will always remain our most important partner,” Vietnamese Foreign Minister Bui Thanh Son said at a meeting with his counterpart in Hanoi. The emerging country had abstained from voting on a resolution against Russia’s war of aggression in the UN General Assembly – just like Laos, Sri Lanka, India and China.
Russia is also still accepted as a dialogue partner in other parts of the continent: Lavrov arrived in Indonesia on Thursday for the summit of the G20 countries. Cambodia used the occasion to invite the Russian foreign minister to a meeting of the Southeast Asian state association ASEAN in early August. Officially, almost all countries in the region describe themselves as neutral with regard to the Ukraine war. In Southeast Asia, only Singapore joined western sanctions.
For Russia, the region is not only important as a possible energy sales market. Russia is also dependent on Asian manufacturers for technology imports. In 2020, the country got a third of its semiconductors from Southeast Asia — the majority of which came from Malaysia, Russia’s top supplier to China.
More: The next fuel price surge – India makes petrol exports to Europe more expensive.